December 2023 Commentary: Balancing Act


  • Despite early 2023’s recession fears and banking crisis, the market rallied with U.S. large cap stocks up 26.3% and U.S. intermediate-term bonds up 5.5%, buoyed by moderating inflation.
  • This year’s positives included a resilient U.S. consumer, a tight labor market, and a nascent artificial intelligence boom, although some negatives—including heightened geopolitical tensions and an extended manufacturing slump—persisted.
  • Although U.S. retail sales were strong, credit card usage rose rapidly, and U.S. government deficit spending reached record levels, raising concerns about fiscal health.
  • ‘Balancing act’ defines 2024’s outlook. The Fed is delicately managing inflation versus recession risks, while the Treasury must navigate rolling massive amounts of government debt amidst reduced foreign demand. Investors, facing wide-ranging scenarios—from significant downside risks to an economic reacceleration—must remain humble and nimble.

Read and download the commentary here.

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